Introduction
The Local Government Rates and Other Matters Act 2019 (the “Act”) as amended by sections 262 to 274 of the Historic and Archaeological Heritage and Miscellaneous Provisions Act,came into effect on 1 January 2024, bringing substantial changes to the existing framework. Commercial rates play a vital role in funding essential services within local authorities, contributing approximately 26% of their revenue. The changes aim to enhance transparency, streamline payment processes, and introduce stringent measures, bringing about a paradigm shift in the commercial rates regime.
Billing
A notable change in billing procedures involves the transition from the previous biannual “moieties” system to a single annual charge due on the first day of January each year. Commencing in 2026, interest on unpaid rate accounts will be enforced, emphasising the importance of timely payments. Amendments to valuation lists take immediate effect, with pro-rata liability and billing applying where occupation begins or ends mid-year.
Sale of Property
A crucial change is the obligation that a person selling a property must settle any outstanding rates and accrued interest before completing the sale. Failure to comply may result in criminal charges with fines up to €5,000 or imprisonment for a maximum of six months. Commitments to pay outstanding rates from sale proceeds after completion are no longer permissible. Notably, charges for unpaid rates cease upon the property’s sale, becoming the vendor’s personal liability.
Local Authority Confirmation
To facilitate compliance with rate payment obligations before completion, liable persons can seek confirmation from the local authority regarding any unpaid rates and accrued interest at the expected completion date. Local authorities must respond within 10 working days.
Vacant Property Abatement Scheme
Non-payment of rates by an owner / liable person triggers a statutory charge on the property until the rates are fully paid. In cases of partial vacancy or seasonal vacancies, the 2024 rates bill remains payable in full. Local authorities are empowered to create schemes for abating rates on vacant properties, with the abatement level set individually by each authority.
Duty to Provide Information and Notification
Failure to notify the local authority of a change in the liable person where they (i) cease to be a liable person, (ii) become a liable person, (iii) change their status as a liable person or failure to give notice if the ratepayer becomes aware of incorrect information being held by the local authority is now a criminal offence. Ratepayers must provide notice within 10 days of becoming aware of incorrect information or may be found guilty of an offence on summary conviction and liable to a fine not exceeding €5,000.
The Definition of Liable Person
Challenges arise in the definition of a “liable person” in Section 4(4) of the Act. According to this section, a liable person is defined as the occupier of a property on a specified day or, if the property is unoccupied, the person entitled to occupy it on that day. However, Section 4(4)(b) creates confusion as it only applies when a person ceases to be a liable person during a local financial year, without causing cessation due to a change in occupation or ownership. While the text suggests that the intention was to allow for the liable person to change within a year, there is no provision in Section 4(4)(b) or elsewhere in the Act to make a liable person cease to be so before the end of the financial year. The recommended approach is for a liable person selling a property to pay the rates for the entire year and then seek reimbursement for the remaining fraction of the year through contractual apportionment. This aligns with the practice when a vendor has already paid the rates in full.
Conclusion
The new commercial rates regime, marked by stringent measures and criminal offences, represents a significant departure from past practices. Professionals involved in property transactions and management must grasp the amended legislation’s nuances to navigate the evolving landscape successfully. While the new rules offer clarity for landlords and secured lenders regarding property disposal, challenges, such as short-term borrowing for rate discharge and complexities in liable person definitions, necessitate adaptations from legal and property management professionals. The reduction in the abatement of rates on vacant properties may also impact landlords’ decisions and may cause landlords to postpone taking possession back from tenants, unless they have other letting arrangements organised, highlighting the far-reaching implications of the new legislative changes.